ECA TO DISBURSE S$200 MILLION LOAN FOR KRAKATAU STEEL

Jakarta, Dec 10 (ANTARA) - State-owned steel company PT Krakatau Steel (KS) said the European Export Credit Agency (ECA) consortium was expected to disburse at US$200 million for KS in the first quarter of 2009.
"We hope we can receive the loan in the first quarter of 2009," KS President Director Fazwar Bujang said here on Wednesday.
He said there was an agreement on the disbursement with three consortium banks, among others the Kfw Bank of Germany and HSBC of Hong Kong.
The loan would be used to modernize PT KS's factories in order to accelerate its development and increase its production capacity, he said.
Previously, Minister for State-owned Enterprises Sofyan Djalil expressed his support for the company's efforts to obtain funding from banks so that it could achieve its corporate targets.
"We support the company's efforts to obtain funds from foreign banks because there is uncertainty with regard to its plan to hold an initial public offering (IPO) in the capital market at the present situation," the minister said.
He said that KS should be able to explore funding sources amid global financial crisis so that the corporate investment plan and other corporate targets would be achieved.
KS has actually secured the agreement of the House of Representatives to carry out IPO in 2008 but it has not been realized because it is impossible to do so in the current market condition.
The proceeds from the IPO of the state-owned steel and iron company were expected to reach Rp2 to Rp2.5 trillion.
Even though it will obtain loans from the ECA consortium, Fazwar said, it does not mean that KS will cancel its IPO plan.
"It is not canceled. The IPO will go on based on plan," he said.
On the financial performance of the company until the end of 2008, Fazwar said it was difficult to predict.
KS will need a fund of Rp16.4 trillion up to 2012 in order to support its business expansion plan. ***2***